You have just appointed your first board, or your company is growing fast enough that someone has asked whether the founder should step back from the day-to-day and chair the board instead. The question lands on the table: should the same person hold both the chair and CEO roles, or should they be split? It is a structural choice that shapes how decisions get made, who holds whom to account, and how much authority sits in one set of hands.
The legal position and what the question is really asking
Under the Corporations Act 2001 (Cth), nothing expressly prohibits the same person from being both chair of the board and managing director (or CEO). The Act's replaceable rules — including s 248E on chairing directors' meetings — can be modified or overridden by the company's own constitution. In other words, the Act leaves the structural choice to the company itself.
The real question, then, is not "can we?" but "should we?" — and the answer turns on your company's stage, ownership structure, and the governance risks you are willing to carry.
One option that sounds different but often collapses into the same outcome: appointing a "non-executive chair" who in practice defers to the CEO on every material decision. A title without genuine independence provides little of the oversight benefit the separation is meant to create.
For ASX-listed entities, the question is largely answered by Recommendation 2.5 of the ASX Corporate Governance Principles and Recommendations (4th edition, February 2019): the chair should be an independent director and should not be the same person as the CEO. That recommendation operates on an "if not, why not" basis — a listed company can depart from it, but must explain publicly why it has done so. For unlisted companies, including most small-to-medium businesses, it is a governance best practice rather than a binding rule.
Ownership, independence and conflicts of interest
How concentrated your ownership is
In a company with one or two founders who own most of the equity, combining the chair and CEO roles may feel natural — the same people bear the risk and make the decisions. The governance cost is low when owners and managers are the same. The calculus shifts as soon as outside investors arrive, a minority shareholder joins, or the company takes on debt covenants that require independent board oversight. At that point, a sole chair-CEO is a single point of failure for accountability.
Whether you have independent directors at all
The chair's core function is to lead the board in overseeing management. If your board is entirely made up of founders and executives, separating the title of chair from the title of CEO achieves little on its own — there is still no independent voice challenging management's assumptions. Genuine separation requires at least some directors who have no financial or personal relationship with the company that could compromise their independent judgement.
The risk of conflicts of interest
Directors owe duties under s 181 of the Corporations Act 2001 (Cth) to act in good faith and in the best interests of the company. When the same person chairs the board and runs the business:
- They set the board's agenda and control what information reaches other directors
- They chair the meeting at which their own performance and remuneration are reviewed
- Any vote on executive pay, strategy approval, or senior appointments carries an inherent conflict
- Dissenting directors may find it harder to raise concerns or call for independent review
A company constitution can grant the chair a casting vote to break a deadlock. Where that casting vote sits with the CEO as well, a single individual can resolve board disputes in their own favour.
The quality of decision-making at board level
The board's role — strategic oversight, risk governance, CEO performance review — requires a degree of distance from the day-to-day. A CEO who also chairs the board is simultaneously the person being held accountable and the person responsible for holding themselves accountable. That arrangement tends to produce shorter, less critical board discussions and reduces the board's ability to surface problems before they become crises.
A separate chair acts as the main conduit between the board and management. That liaison role is structurally difficult to perform when both titles belong to the same person.
The company's growth stage and external relationships
Early-stage companies, family businesses, and sole-owner operators often run well with combined roles. As a company takes on external capital, seeks enterprise customers, enters regulated industries, or prepares for a future sale or listing, the signal sent by governance structure matters. Sophisticated investors, lenders, and acquirers will scrutinise board independence. A chair who doubles as CEO is a disclosure point that requires explanation.
When to separate the chair and CEO
| Company profile | Combined role | Separate roles |
|---|---|---|
| Founder-owned, pre-revenue or early growth | Lower risk, common | May be premature if no independent directors yet |
| Family business, no external investors | Acceptable, monitor conflicts | Beneficial once non-family directors join |
| External investors (VC, PE, angel rounds) | Often resisted by investors | Standard expectation from Series A onward |
| ASX-listed entity | Requires "if not, why not" disclosure | Recommended under ASX CGC Recommendation 2.5 |
| Regulated industry (financial services, health, aged care) | Higher scrutiny from regulators | Strongly preferred by regulators and licensing bodies |
The pattern: most unlisted companies start with combined roles and separate them when an outside stakeholder — an investor, a lender, a regulator, or a prospective buyer — has standing to ask why they are not separate. Waiting for that trigger is not necessarily wrong, but it means the separation happens reactively rather than as a planned governance step.
Where there is a genuine view: companies that have taken on outside equity, operate in regulated sectors, or have more than two or three directors on the board will nearly always be better served by separating the roles. The accountability benefits are real; the operational cost is a regular communication process between the chair and CEO, which a well-run board has anyway.
How Artificer Legal can help you make and act on the call
Deciding whether to separate the roles is straightforward in principle. Acting on the decision is where the detail matters — and getting the detail wrong can create conflicts or ambiguity that are harder to resolve later.
An Artificer Legal practitioner can help you:
- Review your existing constitution to understand what it currently says about the chair's powers, the casting vote, and the managing director's authority — and identify any provisions that embed a combined role
- Draft or amend a company constitution to clearly define the chair's role, the CEO's delegated authority, and the governance processes for resolving conflicts between them
- Advise on director appointment deeds that set out the independent chair's responsibilities and the expectations around board conduct
- Structure the transition if you are moving from a combined to a separated model, including the sequence of resolutions, notice requirements, and ASIC notifications where applicable
- Stress-test your assumptions if an investor or lender is asking questions about board independence before committing capital
The goal is not just a governance structure that looks right on paper, but one that will hold up when a real disagreement arises between the board and management.
The trigger: a stakeholder outside management
The factor that most reliably decides this question is not company size, turnover, or industry — it is the presence of a stakeholder who is not also management. The moment a person with a genuine stake in the company's performance has no seat at the table that management does not also control, the combined chair-CEO structure stops working. That stakeholder might be a minority shareholder, an institutional investor, a lender with covenants, or a regulator. Their arrival is usually the point at which separation stops being optional.
For companies that have not yet reached that point, the practical summary is this: the Corporations Act 2001 (Cth) does not prohibit combining the roles. The ASX Corporate Governance Principles recommend against it for listed entities. For unlisted companies, whether to separate is a governance judgment — but the board should make it consciously, document the reasons, and revisit it as the company's ownership and stakeholder base change. A company constitution that gives the chair a casting vote, sets out the CEO's delegated authority, and specifies how conflicts between the two roles are managed is worth far more than a title split that exists only on the register.